Can your supply chain serve segments of one?

June 8, 2018

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Today’s supply chain model is living on borrowed time, soon to be replaced with a new construct that features thousands of partners coming together to dynamically serve segments of one. That’s one of the key findings of Accenture Strategy’s Future of Supply Chain research, which explored how the supply chain of the future will be configured, operated, managed and connected.

According to our study, companies will have to configure their supply chains in new ways to meet ever-changing customer expectations. Supply chain leaders we surveyed see most customers demanding: a wider selection of products (71%), that are customized (76%), reliable (73%), sustainable (69%) and delivered as rapidly as possible (76%).1 In other words, customers are quickly becoming segments of one, each with their unique needs, behaviors and preferences. And every one of these segments can generate incremental growth, so companies simply can’t ignore them.

Supply chain leaders recognize this. They’re already working to respond to a more varied set of customer requirements through better and more detailed segmentation. They also know they need to take the next step—developing and providing customized solutions that deliver value to every customer. In fact, 83 percent of executives believe new supply chain archetypes will be created to meet different customer requirements and define supply and fulfillment options for each.2

From handoff to handshake

So, the question becomes, what does this future supply chain look like? How do companies configure their supply chains to be able to efficiently, effectively and profitably meet the needs of this increasingly fragmented customer base? According to 79 percent of executives, the answer is a flexible, asset-light model.3 This type of ecosystem enables a company to serve multiple customer segments through multiple supply chains that are based on a network of shared assets, and leverages partners and digital tools to foster agility and responsiveness at scale.

In an asset-light model, a company maintains its own core capabilities to meet the needs of its core customer segments. The company then leverages a wide range of external providers across its ecosystem to fulfill incremental demand from the segments of one that it can’t handle effectively or profitably on its own. The illustration below shows what a future ecosystem could look like.

Three elements are key to creating and capitalizing on an asset-light model.

The first, of course, are the right partners for the ecosystem. They could be companies that come together to share resources and improve utilization for mutual benefits. Or, as shown above, they could be third-party platforms that provide a particular service or capability and can be mobilized quickly to respond to unique demands. With the right mix of partners, a company could theoretically activate thousands of different supply chains at a moment’s notice.In the case of 3-D printing, such partnerships are already happening. A collaboration comprised of a global logistics company, an additive manufacturer and supply chain technology provider is offering a seamless, on-demand 3D service from the order, to manufacturing and final delivery. Customers’ 3D printing orders are placed through the additive manufacturer’s website and can be shipped the same day if needed.

Micro-segmentation also will be critical. That’s different from traditional segmentation, in which customers are divided into several segments depending on consumer choices, psychographics and behavior. Micro-segmentation enables a company to meet liquid customer expectations by continuously monitoring customer demand and behaviors—using customer, social and a variety of other relevant data—and modifying products and services accordingly to provide highly customized experiences.

Underpinning it all is technology. To perform continuous micro-segmentation, a company needs sophisticated analytics, artificial intelligence and other tools to effectively mine and make sense of a wide range of customer data in real time. Digital technologies also are vital to capitalizing on other company data to improve overall supply chain performance. And they will play a big role in managing and operating the vast, varied ecosystem that will be fundamental to responding to marketplace and customer requirements. One example: A food and beverage manufacturer is already transforming its last-mile demand and supply matching for small retailers. It has rolled out on-demand apps that allow these customers to place orders when needed. An on-demand workforce is notified to fulfill them.

Pivoting to the new

A second Accenture Strategy survey found that 60 percent of business leaders would build an ecosystem to disrupt their industry.4 For supply chain executives, the “segments of one” future is rapidly approaching. To be the disruptor, not the disrupted, companies need to prepare now. This includes identifying which parts of the supply chain are configurable, designing the segmentation strategy for a new asset-light ecosystem, and determining the capabilities and technology needed to enable the new model.

These are the first steps to creating supply chain ecosystems that can power growth and competitive advantage in the coming years.